As the Microsoft-Yahoo will-they-won’t-they? saga drags on, Google’s role in any future talks becomes more apparent.

On Thursday Google CEO Eric Schmidt said a two-week trial selling search advertisements on rival Yahoo last month had given the companies good reason to discuss cooperation, but there was no deal yet.

That isn’t great news for some in the online advertising world.  As commentators have pointed out, a Google-Yahoo partnership (Yahoogle? Yoogle? Gahoo?) could concentrate too much power with just one team. This has led to some folk to paint Microsoft as the little guy. Yes, the same Microsoft, which is a Monopoly 101 case study for first-year economics college students.

In a TV interview with CNBC on Friday, WPP CEO Martin Sorrell said, “It was a shame…that those negotiations failed. Maybe they’ll come back again.”

Sorrell, whose empire of ad agencies includes Ogilvy, JWT and Y&R,  said the advertising industry lost a potential balancing influence in the Web search market when the talks between Microsoft and Yahoo collapsed.

Meanwhile,  Silicon Alley Insider reports that Google is seriously considering having display ads on its home page, based on statements from executives. SAI estimates Google could add up to $3 billion to $4 billion in annual revenue if it decided to do so.

 Keep an eye on:

* British video search engine company Blinkx sees it shares fly on rumors of a possible bid by News Corp or Google  (Reuters)

* MySpace lets users share their profiles across the Web (Reuters)

* Real Networks spins off its gaming division (GigaOM)

(Photo: Reuters)

Youtube video we wish existed: Sumner Redstone rocking out on “Rock Band” to the Beastie Boys’ “Sabotage” or Bon Jovi’s “Wanted Dead or Alive.”

In the meantime we can assume that Viacom’s octogenarian executive chairman is rockin’ today after the media conglomerate said its first quarter profit rose 33 percent on strong sales of the “Rock Band” video game and higher advertising revenue at MTV Networks. Revenue rose 15 percent to $3.1 billion, beating analysts’ estimate of $3 billion.

It gets even better in the Viacom executive suite, at least for today — its film “Iron Man” kicks off the summer blockbuster season to positive reviews, including that of tough Wall Street Journal reviewer Joe Morgenstern who said it had “exhilarating” action and “scintillating” comedy.

Industry gurus suggest the opening box-office take could top $100 million. Ka-ching! (It cost $135 milion to make.)

The good news does not negate lingering issues at Viacom, namely the resiliency of its cable networks in an advertising environment that is challenging at best. Also, everyone wants to know more about the new premium cable/VOD enterprise being built by Viacom, MGM and Lionsgate.

Or, what about the risk of collapsing the distribution window so that Apple’s iTunes sells movies on a DVD’s release date?

I just want to know: would Redstone rather jam to David Bowie or Blue Oyster Cult?

(Reuters)

Keep an eye on:

• Microsoft’s Steve Ballmer says the company poised to detail its next moves on Yahoo (Reuters)
• A night after Tuesday’s much-discussed on-air blunder by “American Idol” judge Paula Abdul, the results show of the talent show lost 1.2 million viewers from the previous week. (Hollywood Reporter)
• Is Microsoft working on a Blu-ray player for the Xbox 360? (Engadget)

(Photos: Sumner Redstone and wife Paula Fortunato, Reuters; www.rockband.com)

Quarter after quarter, analysts and the financial press keep pressing advertising executives about the economy and spending. For good reason, too, since corporations often take scissors to advertising budgets during downturns.

Thing is, the chief executives of the big ad holding companies so far have given very much the same answer during conference calls and interviews: everyone is worried, nobody is cutting spending.

Interpublic CEO Michael Roth is no exception. Here’s what he said on Wednesday about the economy/spending issue during his company’s earnings call:

“Of course, it goes without saying clients remain cautious due to broader economic concerns. To date we are not seeing signs of a pullback. But we continue to monitor the situation closely so as to be able to response quickly should the need arise.”

Here’s Publicis Groupe’s Maurice Levy:

“Not one single client has changed its plans. We continue to work with our clients according to plans.”

And Omnicom’s John Wren:

“Like most of our clients, we remain cautious about the economy, but to date, as I said, we have not seen any significant reduction in client spending.”

Havas’s Herve Philippe had this to say:

“Today we do not see any impact on our numbers from the international environment.”

So everyone seems to agree that nothing is happening — yet.

What’s that mean? It could be the industry is painting the brightest picture possible, which isn’t unheard of in advertising. Or it could mean companies aren’t yet feeling the full effects of the slowdown, and don’t need to take scissors to ad budgets. Or perhaps the thinking in the corporate world has shifted, and executives believe marketing is too important to cut. Or maybe the big cuts are just working their way through the system and will show up next quarter.

Give us your best guess. We’re interested.

(Photo: Reuters)

Hold on to your hats, it’s time for the upfronts!

Or maybe it’s “hold your horses” instead. We forgot for a moment that this year the annual advertising bonanza is supposed to be a bit more subdued.

Still, CBS chief executive Les Moonves sounded fairly pumped up about the presentation on May 14, telling analysts that he felt “truly excited about this year’s show because it clearly showcases the way we are refining our media assets and updating our programming to match the needs of today’s market.”

Advertising prices, he said during CBS’s earnings conference call, have been up in the double digits in the scatter market, leading him to forecast a “healthy upfront selling season.”

But before negotiations get into full swing, there is the issue of the upfront presentations themselves. What will they look like after the screenwriters’ strike cut short the development season and prompted the industry to rethink (sort of) how it does business?

Moonves said that many of the network’s new 2008-09 shows were made as presentations rather than pilots. Presentations, he said, could be shot in five or six days rather than 10 or 12 for pilots, cost 50 percent less, and contain only what would be the key scenes of the storyline.

“To say we’ve saved tens of millions of dollars in development costs would be an accurate statement,” he said.

It remains to be seen what impact the shortened development season will have on quality, although Moonves said a “compressed” season could pressure writers into doing better work.

By the sound of it, that’s an educated guess by Moonves, who said he’s seen just two of the new CBS shows, “One which I absolutely adore.”

Who’s making the grade in advertising? We found out today, with the release of Adweek’s annual agency report cards.

Although Adweek admits the ratings aren’t a “perfect science,” they do take some hard numbers into account, including revenue gain, revenue per employee, and billing-to-revenue ratio. Trickier is grading the creative side. Adweek says it judges the work based on creativity, originality, positioning and strategy.

Enough about methodology. Let’s rip open those envelopes.

Top agency grades went to Publicis USA (A-) and Saatchi & Saatchi (A-)

Worst agency grades went to Doner (D) and Campbell Mithun (D), followed by slightly better ones at GSD&M Idea City (D+) and Lowe (D+).

Generally, grades came out stronger on the media agency side, with Initiative, Mediaedge:cia, MediaVest, and Zenith bringing home top grades (A-). MindShare and Carat posted the lowest grades, but even those weren’t so bad (B-).

You’re nothing without a logo. And AOL’s Platform-A online ad sales division finally gets one.

From AOL’s Corporate site:

AOL today revealed the logo for its Platform-A advertising division. Lynda Clarizio, President of Platform-A, said that the new logo “effectively communicates our distinct competitive advantage of scale and reach. And its bold and simple design fits with our mission of providing advertisers and publishers with effective, impactful and easy-to-use solutions to their digital advertising needs.”

Complementary brand identities for companies owned by Platform-A will be rolled out in the coming weeks.

Noticeably missing? AOL.

“It’s a success! Now what?”

Yahoo may be ready to turn over its Web search advertising to Google following a successful test using Google’s service to deliver ads alongside its Web search results. But that’s only the beginning of what could be a swirl of deals. Or Not.

The way PaidContent sees it , if this alternative stands, and then, say, AOL merges with Yahoo, then the Google-Yahoo arrangement may have to pass anti-trust muster. And regulators are likely to give a thumbs up, TechCruch says, adding this rosy tidbit:

Everyone, even Yahoo, realizes that a Google search deal is a slow but certain death for the company.

That is unless Microsoft buckles and ups its $31 a share offer.

What do you think will happen to Yahoo?

(Wall Street Journal)

Keep an eye on:

• Thomson Reuters debuted on Thursday as a leading global information company, hoping a portfolio of products from financial to legal and health-care will help it ride out a financial industry downturn. (Reuters)
• Universal Studios will soon release all its new videos on the victorious Blu-ray rival at the same time as its standard DVDs. Universal’s Blu-ray strategy includes plans to release about 40 titles in the second half of the year. (Hollywood Reporter)
• Google’s troubling trend of slowing click growth has Wall Street worried the Internet giant will fall short of forecasts when it reports first-quarter results later today. (NY Post)
• PepsiCo has dumped the agency that had been handling its massive Gatorade and Tropicana accounts for the past six years, throwing that agency’s future into question. (WSJ)

(Photo: Reuters)

The International Advertising Association (IAA) is holding its World Congress in Washington D.C. this week, when hundreds of advertising and media executives descend on the nation’s capital to talk about social communities, marketing regulation, return on investment, and, of course, the economy.

Here’s what ad industry types are saying:

“Advertising and the economy seem to go hand in hand. Really, the fact that the economy is weakening is going to have an impact on the industry in the short term.” Bob Liodice, President, Association of National Advertisers

“An actors’ strike would be incredibly devastating, particularly to the television business. The industry paid a large price for the last work stoppage. I don’t think either the (local) economy or the business would be able survive something like that.” Jeff Zucker, Chief Executive Officer of NBC Universal

“Speed is the new big.” Chuck Brymer, Chief Executive Officer, DDB Worldwide

“We’d love to be able to be able to put all that we do together… Unfortunately, our industry is just not doing a very good job of integration.” Michael Roth, Chief Executive Officer, Interpublic Group

“Measurement is fundamentally the biggest challenge we as an industry face.” Elizabeth Ross, President, Tribal DDB

“What we’re going to see is a shift in advertising. Companies want to make sure they get the best ROI during these tough times. But they won’t stop spending, and I think they really should spend more.” Wally Snyder, President, American Advertising Federation

“Right now they (18-26 year olds) are spending more time on the Internet than they do a combination of TV and radio. About 15 hours per week.” Kevin Johnson, President, Platform and Services Division, Microsoft

“We’ve stopped using the term ‘consumer.’ If you think about it, it’s somewhat derogatory. Makes people sound like eaters.” Tom Bernardin, Chief Executive Officer, Leo Burnett

“The business model in which the agency’s sole function is to create advertising and buy media on behalf of clients is no longer viable. Indeed, we need a new model. The agencies of the 21st century need to develop relationships with clients where both parties share risks and rewards equally in true partnership.” Tateo Mataki, Chief Executive Officer, Dentsu

The good news on ad spending ain’t so good. According to ZenithOptimedia, spending on advertising in North America and Western Europe is expected to grow by 3.8 percent this year. But that is lower than an earlier forecast of 4.4 percent, as the credit crunch saps confidence.

This comes after Carat, the media network owned by UK group Aegis, earlier this month cut its own forecast for growth in global ad spending in 2008 to 6 percent from 6.2 percent.

An even more grim reality: Ad agencies are prepping for a recession.

The silver lining is online, of course, but it may not last. Zenith sees U.S. online ad spending growing 23.4 percent this year to $47.5 billion, an upgrade from the 19 percent forecast in December, amid the continued shift from traditional media to interactive. But it downgraded its 2009 forecast for online to 15.8 percent growth.

(Reuters)

Keep an eye on:

• Sony Pictures Television is looking to launch the first movie network on mobile phones in the United States, and has signed a deal with AT&T and MediaFLO USA to launch in May. (Hollywood Reporter)
• Microsoft and a company headed by Peter Safran, the veteran Hollywood producer and talent manager, have agreed to produce original shows for distribution on the Xbox 360 game system. (New York Times)
• More than 100 staff at Newsweek have accepted a buyout last week, including many senior editors and researchers. (Radar Online)
• Microsoft - Yahoo: No News is good news? (AllThingsD via Silicon Alley Insider)
• Live Nation lands 12-year digital branding, touring and merchandising pact with U2. (Reuters)

(Photo: Reuters file)

More than just the cute guy or girl catches your eye at the bar these days.

Nearly 80 percent of people surveyed in a recent study recalled at least one of four advertisements running on digital billboard screens at bars where they were partying. That’s not a bad number considering the audience surveyed by Arbitron and Zoom Media & Marketing — 500 people aged 21 to 34.  That’s a demographic that advertisers love.

It shouldn’t be overlooked that Zoom Media is an advertising company with a big digital presence in bars and nightclubs. Still, the survey suggest that digital billboards really are getting eyeballs.

Another finding from the survey: “Consumers who were exposed to the advertising were much more likely to consider certain brands as category leaders. For example, when asked what they thought the top new video games were, twice as many people were likely to answer Assassin’s Creed — which was one of the commercials used in the survey — compared to those not exposed to the ad.”

Note that the study found 40 percent of those surveyed visit bars over 10 times a month. So whether these folks could recall the advertisements — or where they left their shoes — the next day is another matter altogether.

(Photo: Reuters)